Imagine a world where you actually own your home or place of business. If you believe we live in that reality today, you are sorely mistaken. That's because under Texas' current property tax system, every property owner pays an annual property tax. If that tax goes unpaid, the taxing jurisdiction has the authority to seize your property. Under this taxing system you never really own your property, since annual property taxes are like “rents” due each year and failure to pay can result in foreclosure or “eviction” from your property.
Will Texas Ever Eliminate Property Taxes?
I’ve heard rumblings from various sources over the past couple of years about the elimination of Texas property taxes and it seems to be garnering more attention as of late. Conservative groups are pushing for the complete elimination of the Texas property tax, which is the major funding source for Texas’ cities, counties, and schools. These conservative groups argue that the system is broken, there is no way to repair it, and that the property taxes essentially cause Texans to be squatters in their own homes.
Rep. Harvey Hilderbran, chairman of the influential House Ways and Means Committee, is the latest high-profile official to champion the idea. In a recent interview, Hilderbran revealed his intention to file legislation next session to begin the process of abolishing residential and commercial property taxes. Hilderbran stated “A lot of Texans want to see us do something dramatic about property taxes. Property taxes are our biggest barrier in the tax code to economic development. The challenge is finding the right mix to replace it with and understanding the options. If enough of it is good, I’m certainly interested in pursuing this.” Although Hilderbran indicated he would like to see the legislature move toward getting rid of property tax, he cautioned that the committee had not been presented with enough information to take definitive action.
Solutions to the Texas Property Tax Problem
Various proposals exist for making up the budget difference should Texas eliminate the property tax, with most centered on a reformed sales tax. The Texas Public Policy Foundation identified four scenarios in which the sales tax base could reasonably be adjusted to produce a neutral revenue swap. Proposed options include raising the current sales tax rate, or raising the sales tax rate combined with applying a retail tax to items that are currently tax exempt. While alternatives to the current property system work on paper, the reality of unwinding an engrained industry that is essential to the function of every day government seems like an immense challenge. In the meantime, my advice is to pay your property taxes…it’s not worth risking the loss of your home. If you are unable to pay your taxes on time, you might consider a property tax loan. Texas property tax loans provide a lower cost alternative to tax assessor penalty and interest charges. Visit www.propertytaxfunding.com to learn more about low cost property tax loans.
